The “old” theory about inequality was that redistribution via the tax system weakened incentives and undermined economic growth. But the relationship between inequality and growth is far more complex and multi-dimensional than this simple trade-off suggests.
While Boris Johnson, the likely successor to British Prime Minister Theresa May, takes his country down a path of diminished trade, the European Union is negotiating one of the largest free-trade agreements in the world. One really has to wonder what the "buccaneering" Brexiteers have to complain about.
For months, the world looked on as Turkish President Recep Tayyip Erdoğan attempted to reverse the outcome of the city's municipal election. But now that Erdoğan's party has been defeated once again (and massively so this time around), his fundamental weakness has been exposed – as has that of populist authoritarians everywhere.
We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.
MILAN – Rising income and wealth inequality in many countries around the world has been a long-term trend for three decades or more. But the attention devoted to it has increased substantially since the 2008 financial crisis: With slow growth, rising inequality bites harder.
The “old” theory about inequality was that redistribution via the tax system weakened incentives and undermined economic growth. But the relationship between inequality and growth is far more complex and multi-dimensional than this simple trade-off suggests. Multiple channels of influence and feedback mechanisms make definitive conclusions difficult.
For example, the United States and China are the fastest-growing major economies today. Both have similarly high and rising levels of income inequality. Though one should not conclude from this that growth and inequality are either unrelated or positively correlated, the unqualified statement that inequality is bad for growth does not really accord with the facts.
We hope you're enjoying Project Syndicate.
To continue reading, subscribe now.
Subscribe
Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.
Already have an account or want to create one? Log in